10 Insane (But True) Things About Business Loans

One of the most momentous tasks for startup founders is fundraising. Every beginner is faced with it. You must do a great job to get seed capital.

While starting your business, you should get acquainted with business loan interest rates. You may ask a business advisor to provide you all the information about it.

1. Possibility to Get Credit for a Startup Is Very Low

If you have a small street business, you have no chances to get money in advance. Actually, you’re able to receive money when you’re 6 or more months in the business earning $100,000 annually. However, you have to pay off this credit for 6 months. So, it’s impossible. However, you may ask your family or friends to borrow you some money. It’s really hard to make a business from the ground up.

2. There Are Too Many Fraudsters

Nowadays there are lots of online borrowings. So, it’s easier for businessmen to get a loan. But unfortunately, it has provoked the appearance of various crooks. These people try to take your money using your individual and business data and introducing themselves as legal lenders. In order not to become the victims of con artists, learn your creditor carefully and be sure, that everything’s in order.

3. It Is Difficult to Get a Bank Loan

Bank credits provide typical conditions. You should be 2 years in this deal, have a good income (at least $250,000) and have a good reputation. However, it’s quite possible that you can be refused. Banks prefer to give money to strong and really good businesses. Only a little amount of them may apply for a bank loan.

4. It Is Better to Get Acquainted With 5C’s of Credit

Character: lenders want to know your character learning your credit history and different certificates. Capacity: most creditors check your debt-to-into balance and reports of it. Capital: it’s the sum of money you have invested in your deal. Conditions: lenders check all the factors and tendencies of your deal. Collateral: it’s any real estate, inventory or other things you may put up.

5. Imagine That You Are a Lender

While requesting for a loan, behave yourself in such a way that you pretend for a job. You should have a great application in place of a good resume. In this case, it’ll mean understanding your economic situation. You have to look professional, because you may probably not receive money if your appearance does not inspire confidence. A business person must show that he or she believes in the business.

6. Analyze Your Mistakes

You should always consider your errors. Find out why a creditor refuses you. Don’t leave this for a long time. While going to the next lender, you have to cope with previous problems. If you can’t solve your troubles, ask a business advisor to help you. Anyway, try to cut through all that.

7. Always Learn What You Get Into

You should know the annual percentage rate (APR) of the credit. Learn the fees and prepayment punishments as well as you can. Find extra information about banks and their service, APR and other important things. You must be a well-informed client in order to avoid problems later.

8. You Have to Pay So Much for an Alternative Business

Actually, 24% APR is a good agreement. It’s because due to alternative business credits. You have to repay it for 1-4 years. It’s difficult to make the percent rate lower because for business credits it’s usually high. In conclusion, lots of businesses fail, they can’t repay all the credits.

9. Work With SBA Lenders

You should take into account lenders who are supported by Small Business Administration (SBA). The matter is that loans for SBA often have low percent rates and good conditions for repayment. Don’t worry if you’re refused by one SBA creditor. Anyway, you may ask another one to give you a loan.

10. Online Lenders

Alternative creditors, or as they’re also called – online lenders – take higher rates. However, they have more comfortable standards. In addition, Internet lenders also provide onerous conditions and poor transparency. Make sure, if you really demand money and can repay it, you may request online lenders.

Conclusion

To start your own business is very hard work. However, nowadays it becomes a bit easier because of Internet lenders. Anyway, you should take into account lots of factors to get good credit.